The
Latin-Americanization of Greece and the lessons for the
European South*

TAKIS FOTOPOULOS

At the beginning of
February 2010, the European Commission (EC) announced
plans for Greece which were characterised by The
Guardian, with the usual British kind of
understatement, as “the most intrusive scrutiny of an EU
member state’s fiscal and economic policies and
book-keeping ever attempted”, while the Commissioner
himself stated, “this is the first time we have
established such an intense and quasi-permanent system
of monitoring”―a
system that involved a stiff regime of quarterly reports
from the Greek government on progress towards fiscal
probity and the right of the EC to order extra action,
if needed. That was followed, a month later, by the
announcement (made by the Papandreou government on
behalf of the EC) of swingeing spending cuts and huge
tax rises hitting the lower social groups. These
measures involved, in a nutshell, shaving off a month’s
salary from the already low (by Eurozone standards)
incomes of people employed in the public sector ―who are
estimated to be about one million, i.e. 20% of the total
labour force― squeezing of public spending, rises in
indirect taxes including VAT, freezing of pensions and
worsening of social security conditions with respect to
pensionable age, privatisations etc.

The severe cuts in civil
servants’ salaries and in public spending, which will be
complemented by the indirect negativeeffects on incomes
(through the multiplier effect), would bring about,
according to Deutsche Bank’ s predictions, a decline in
the GDP by 4% this year alone, whereas the total decline
of GDP during the implementation of the program in the
next three years would be in the range of -12% up to
-20%. The inevitable effect of these predatory measures
will be an increase in poverty in a country ―which
(together with Spain)
is the joint record holder of poverty in the Eurozone― with
almost 20% of the Greek population, being on the margin
of poverty, struggling to survive.
Furthermore, unemployment will become massive, as the
dismantling of the productive structure, brought about
by the opening of markets since the country’ s joining
the EU, will be complemented now by the effective
dismantling of the public sector. However, as the public
sector traditionally played a significant role in
absorbing the excess labor within the country, the
effects on unemployment would be drastic. The
combination of poverty and unemployment, with the uneven
effects of the increase in indirect taxes on low
incomes, will further increase inequality, one of the
highest in the EU.
The inevitable result would be the creation of a number
of wealthy oases for the rich (locals and foreigners),
in the midst of huge deserts of poverty concentrated in
monstrous urban conglomerations ―exactly as it happens
in similar cities all over Latin America at the moment.

No wonder that the
announcement of the measures have created a huge “river
of anger” that poured in the streets of Athens and other
major cities in repeated general strikes and sometimes
violent demonstrations. Particularly so, as it is more
than obvious that the measures announced will neither
catch the enormous tax evasion, nor shall they force
repatriation to the country of the 10 billions of Euros
or so, already escaped abroad in the last couple of
months since the crisis was announced, to be added to at
least 60 billion Euros which had already fled the
country!However, had these funds
and the local wealth been subjected to a drastic
proportionate extra property tax (something which is of
course inconceivable for the elites), the famous debt
problem could have been solved in a flash, without
having to beg for new loans from the foreign elites,
which (with profit in mind of course!) have been
imposing onerous conditions that the future generations
will have to pay for many years to come. This, despite
the fact that it was the same elites and privileged
social strata (local and foreign) who created and
primarily benefited from the debt and the growth
‘bubble’ it led to.

The
predatory measures imposed on Greece by the Directorate
of the EU, expressing the Eurozone’s political and
economic elites, clearly give the impression of a
complete colonisation of the country by the
transnational elite. It is, obviously, one thing to
implement similar measures by a formal consensus of the
people (as in Britain, Holland, Sweden, etc.) and quite
another to enforce compliance with such measures, as it
happens now in Greece. Particularly so, when these
measures do not have any popular legitimacy, given that
the ruling “socialist” party was elected a few months
ago on a program that provided for policies entirely
different from those imposed now on the Greek people.
This, despite the fact that the leadership of the ruling
party was fully aware of the economic crisis ―which is
basically chronic― and deliberately deceived the
electorate, with the help of the political and economic
elites controlling the mass media, which were keen to
have a “socialist” party elected as the only one capable
to implement such measures because of its comprehensive
control of trade union bureaucrats.

The
fact that the economic crisis is chronic is expressed by
the post-war dismantling of the production structure,
which was brought to completion with the opening of its
markets to the world market ―a process that was
accelerated by Greece’s integration into the EU at the
beginning of the 1980s. The effective dismantling
of the productive structure, in turn, inevitably led to
the creation of “a consumer society without a production
basis” and a continuous growth of the external debt, and
consequently of the public debt that has presently
exploded. Naturally, these developments did not ―nor
could they― lead, anyway, to the formal bankruptcy of
the Greek state, as this would have opened huge holes in
the pockets of German and French holders of Greek state
bonds and would put at risk the stability of Euro
itself. Particularly so, when other countries in the
European “South” face similar problems ―i.e., what the
capitalist markets call the “PIGS” (Portugal,
Italy/Ireland, Greece, Spain). However, the price to be
paid, particularly by the lower income strata (workers,
employees, under-employed, unemployed and pensioners) in
the coming years, will be very heavy indeed. No wonder
the measures were presented by the media, in a massive
brainwashing campaign, as unavoidable, something which
is true only if we take for granted the present
institutional framework of today’s capitalist neoliberal
globalisation, namely, the open and liberalised markets,
which are the ultimate cause of the crisis along with
the consequential treaties of Maastricht, Lisbon and the
Stability Pact.

In
this context, competitiveness, (which depends on low
wages and employers’ contributions/taxes, high
productivity, price stability, etc.) plays indeed a
crucial role with respect to an exporting economy that
bases its development on the free movement of
commodities and capital (like Germany or China!). The
Euro, therefore, cannot be separated from the Stability
Pact, as is hastily suggested by the reformist Left,
because ―in the given institutional framework― it is
only when the common currency is complemented by
criteria like those prescribed by the Stability Pact
that monetary stability and the competitiveness of the
advanced capitalist countries in the Eurozone can be
achieved. In other words, the policies of squeezing
wages, prices and budget deficits, are necessary for the
EU economic elites to be able of surviving in the
competition with the corresponding elites in USA, China,
etc.

But,
if such policies are to the benefit of countries like
Germany, which played a leading role in the design of
the Euro, they are in no way beneficial to countries
like Greece, Spain, or other countries in the European
“South”. Thus, it is true that the policy of “hard euro”
and the consequent policies of squeezing wage costs had
led to a significant improvement of German
competitiveness and consequently of the German balance
of payments which, starting with a deficit of 1% of GDP
in the Balance of Payments on Current Account in 2000,
achieved a huge surplus amounting to 5% of its GDP
today. It is also true that, in the same period, the
labour cost in the European South has risen faster than
in the North and that in countries like Greece and Spain
the increase in labour costs, faster than in Germany,
has led to the decline of their competitiveness and has
consequently worsened their balance of payments
(Greece’s deficit tripled in absolute numbers and
Spain’s increased by as much as six times, etc.). ―which
ultimately led to an increase in the public debt to
finance the bubble of “growth” that Greece or Spain had
enjoyed since their adoption of the Euro.

Yet,
this does not mean that to avoid surpluses in the North
and deficits in the South all countries in the Eurozone
should follow the same policies of squeezing wages and
salaries. One should not forget that, historically,
wages in the South were (and still are) almost half of
those in the North (e.g. the minimum monthly wage in
Greece, Spain and Portugal in 2006 was less than half of
that in the European North). Therefore, implementation
of such policies throughout the Eurozone would simply
lead to further divergence between the North and the
South rather than to convergence, which is supposed to
be a main aim of EU and the EMU! In other words, a real
convergence in wages and salaries would have led to such
huge differences in competitiveness between the European
North and the South that no transfer of funds from a new
institution (like the proposed by the reformist Left
European Monetary Fund) would have been capable to
eliminate. This is why a real convergence within a
capitalist market economy has not been achieved even
within single capitalist nation-states like Italy,
Germany, UK, etc., let alone a monetary union like the
EMU!

So,
the problem with the EU and the EMU is neither their
“lack of solidarity” towards a member state, nor the
policies of “hard Euro” followed by the European Central
Bank and the German and other elites, as the reformist
European Left suggests. The real problem is the EU and
the EMU themselves! As it could be shown by both theory
and historical experience, in any economic union
consisting of members characterised by a high degree of
economic unevenness (as is the case with the EU), the
establishment of open and liberalised markets for
commodities and capital would inevitably lead to a
situation where those that primarily benefit from the
free movement of commodities and capital would be the
more advanced regions/countries (which have already
developed high productivity levels and advanced
technologies) at the expense of the rest. It is not
therefore surprising that, historically, none of the
presently advanced capitalist countries ―which are now
keen to promote the freedom of trade, etc.― opened its
own markets before it had already achieved a high level
of competitiveness for its own exports, under protected
markets.

It is,
therefore, imperative that the anti-systemic Left, in
Greece and in Southern Europe in general, directly
challenges the present European integration in terms of
markets and capital, and fights instead for the
establishment of a new confederation of European
peoples, initially in the European South, where they
share common economic, political and social problems.
This is a first step towards the creation, in the
future, of a new institutional framework which
institutionalises the equal distribution of political
and economic power among South European peoples, and
among all citizens within each part of the confederation
―a development that could serve as a model for the
integration of European peoples as a whole, within a
pan-European confederation of Inclusive Democracies.
This implies the elimination of power structures and
relations, which characterise the present so-called
“democracies” and capitalist market economies, and their
replacement with new societies where the peoples
directly, and not through “representatives,” control the
political process, as well as the economic process
through the collective ownership and control of economic
resources, within a framework of self-management by
workers, peasants and students of factories and offices,
farms and education places respectively, in a way that
reintegrates society with Nature.